How to Set Up a Trust Fund

A trust fund is a powerful estate planning tool that goes beyond a simple will, offering you more control, privacy, and specificity in managing and transferring your assets. Whether it’s jewelry, cash, investments, or real estate, a trust fund can include a wide array of assets.

The grantor creates the trust, and upon their death or incapacitation, a trustee – often a neutral third party – manages and distributes the trust’s contents according to the grantor’s instructions.

Here are the four steps to establishing a trust fund:

1. Selecting the Right Trust

The first step in setting up a trust fund is to determine its purpose, which will guide you in choosing the right type of trust. Options include revocable living trusts, irrevocable trusts and specialized trusts like education, spendthrift, special needs or charity trusts. Each serves different needs, so it’s important to select one that aligns with your goals.

2. Detailing Your Trust

After choosing the type of trust, you’ll need to decide what assets to include, who will receive them, and how they’ll be managed. Selecting a trustworthy and capable trustee is also crucial, as they will manage the trust’s assets and carry out your wishes. Also, consider appointing a successor trustee who would take over if your chosen trustee can no longer fulfill their duties.

3. Formalizing Your Trust

While DIY trust creation services exist, it could be valuable to seek out professional assistance. An estate planning attorney can draft the necessary documents, which you’ll then sign in the presence of a notary.

4. Funding and Registering the Trust

Once you establish the trust, you’ll need to transfer assets into it. This could involve opening a trust bank account and depositing funds or assets, effectively making the trust their new owner. Your trust fund also must be registered with the IRS to obtain a taxpayer identification number (TIN), which is necessary for tax returns and financial accounts.

Navigating trust fund setup can be complex. I’m here to help. Book your session here to learn more.